DecomWorld: Decommissioning an Imperative for Gulf of Mexico Operators in Risk Reduction in 2011

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Recent interim guidance on design and inspection criteria, the introduction of the Idle Iron mandate last October, and a high hurricane activity forecast for 2011 makes decommissioning an imperative for reducing risk exposure, says the latest report from DecomWorld: Gulf of Mexico Offshore Decommissioning Report 2011.

(PRWEB)May 16, 2011

Responding to the high level of risk and cost presented by toppled platforms, last year’s Idle Iron Notice to Lessees (NTL) coupled with the API’s 2007 interim guidance on metocean criteria, design, assessment and inspection, have stimulated asset owners in the GOM to either decommission or divest idle infrastructure.

"Combined with mandatory inspections scheduled for this year, 2011 will see continued heightened activity, comparable to 2010 if not greater, in services related to inspection and decommissioning," says Darren J. Morahan, author of the Gulf of Mexico Offshore Decommissioning Report 2011.

In the last decade alone, no less than 183 platforms in the Gulf of Mexico have been destroyed and 839 pipelines compromised due to hurricane activity. This is partly due to the fact that some 700 of the offshore installations in the Gulf of Mexico were installed prior to 1979 - some built as early as the 1940s.

Installations fail structural integrity criteria
Given that the first official design parameters, known as API RP2A, were introduced back in 1969 in the wake of hurricane Camille, some 697 installations in the GOM are considered pre-modern design with a further 678 considered early modern design. However, even structures designed following modern design practice fall well short of the structural integrity requirements to withstand full force hurricanes.

But the interim API guidance, issued in 2007, introduces more stringent criteria for design, inspection, and assessment with a direct impact on risk management.

From a design and assessment perspective, the guidance increases the maximum wave height by 5 metres, to 27.6 metres increasing the number of fixed structures predicted to experience wave in deck (WID) inundation. The implication is that approximately 40% of the 3,500 installations in the GOM now fall outside of assessment criteria, given that their deck heights are too low.

API is also expected to issue a new RP covering Structural Integrity Management and proactive risk-based management.

Structural Integrity Management (SIM) is the evaluation of integrity throughout the lifecycle of a structure. While it may sound straightforward, it involves extensive data gathering, data management, data processing, and understanding of structural behaviour, competences in specialized fields, and the ability to develop a robust integrity management strategy.

As the report notes, the accurate reporting of inspection results is fundamental for input to a SIM system. “The risk ranking of an operator’s fleet is only as good as the data it relies on”, says Morahan, motioning to a potential chokepoint resulting from a shortage of experienced divers and data recorders trained in documenting inspection findings.

Top mitigation tips
“Planned decommissioning of wells and platforms is fundamental to SIM by mitigating the risk of failure”, says the report.

Hurricane damaged structures are 10-20 times more costly to decommission and pose a significant risk increase to safety. Consequently, the Idle Iron NTL is forcing operators to be more proactive, rather than reactive, to event-driven (hurricane damage-induced) decommissioning.

The number of platforms severely damaged or destroyed during GOM hurricane seasons can be reduced significantly through the adoption of two mitigation strategies:
The first is to plug and abandon non-producing wells and remove conductors or casings from the platform. “A platform with several wells that can be P&A’d and removed will see a significant reduction in wave load and a resulting increase in robustness,” explains Morahan. "The second is to decommission oil and gas platforms no longer being used for exploration and production. "

Additional mitigation strategies include the removal of redundant secondary steelwork in the wave zone, given that any objects that provide a frontage area to waves, current and wind create additional lateral loading on a platform.

Strengthening an existing platform to increase robustness is also an effective preventative measure. “Platforms with low redundancy are only as robust as the weakest part of the structure. Once the first brace, leg or joint fails, progressive collapse follows”, says Morahan. "Strengthening may be as simple as grouting legs, or installing additional bracing."

Another prudent, albeit costly, measure would be to raise decks out of the wave zone. “WID considerably increases the risk of platform collapse. Any reduction in WID loading through deck raising and/or reducing deck steelwork will significantly lower risk”.

Deepwater locations crank up costs
Decommissioning the structure is a key recommendation, but as the reports’ author notes, “The deeper the water, the heavier the structure and the larger the task.”
Of the 330 or so fixed type platforms currently on expired leases, 118 are in water depths greater than 100ft, with an associated increase in decommissioning cost.
One alternative avenue open to owners of larger, deeper water assets is artificial reefing. It is estimated that approximately 70 of the 330 platforms presently on expired leases will be selected for donation as artificial reef sites. The report estimates that a further 70 platforms currently sitting idle in the GOM will be reefed.

Another alternative to decommissioning is to divest assets. According to the report, divestiture of assets in 2010 – notably Apache Corporation’s acquisition of Devon Energy and Mariner Energy for $1bn and $2.7bn respectively - was “a direct result of ongoing decommissioning liabilities associated with hurricane-destroyed platforms and wells and the pending increase in decommissioning costs in the short term associated with the Idle Iron NTL”.
Bumper year for offshore service providers

A combination of planned decommissioning, inspection programmes and hurricane activity implies that 2011 will be a busy year for offshore service providers.
The report predicts that 2011 will be a big year for inspections, given that the majority of the platforms in the GOM were inspected in 2006 and/or 2008, and must be inspected every 3-5 years.

2011 is also projected to be an above average season with 17 named storms, nine hurricanes and five intense hurricanes of Category 3 or higher predicted.

The report concludes that, as operators look to continue reefing economically viable platforms in addition to conventional decommissioning, the demand for related services such as well P&A, topsides cleaning, diving, ROVs, explosives, cutting, site clearance, and onshore recycling will match if not exceed 2010 demand.